The Securities and Exchange Board of India (SEBI) has temporarily halted the initial public offering (IPO) of Go Airlines (India) Ltd due to a pending enquiry against Bombay Dyeing Manufacturing Company Ltd and its promoters, the Wadias.
GoAir filed its draft red herring prospectus on May 13 to raise Rs 3,600 crore through a new share sale. Promoter entities, including Bombay Dyeing chairman Nusli Wadia in his personal capacity, own 96.85 percent of Go Air.
The IPO by GoAir, now christened GoFirst, has been kept in abeyance, the Sebi website showed on Monday.
CFID carries out preliminary and detailed investigations on fraud, diversion or siphoning of funds in listed companies.
Bombay Dyeing and its promoters received a show cause notice from the regulator’s Corporation Finance Investigation Department (CFID) in the first week of June for alleged irregularities, said a person familiar with the matter.
SEBI policy
“As per the internal policy of SEBI, if one department of the regulator is investigating any case, then a related company which has filed for DRHP may not get approval for 90 days, which can be further extended by another 45 days,” said a person familiar with the matter.
Another person familiar with the issue said Go Air had sought an exemption from SEBI and requested the regulator to process the issue.
Typically, SEBI vets the DRHP and only after its approval can an issuer announce a date for its IPO.
Go Air has not heard anything from the regulator so far, said this person. Both persons did not want to be named.
But Remember!
GoAir is trying to raise money at a time when the aviation industry is facing its most difficult challenge yet thanks to the pandemic.
Cash flow from operations fell to Rs 232 crore for the first nine months of FY21 from Rs 1738 crore in FY20.
However, the company had been facing difficulties even before COVID-19 struck. Per the DRHP, the company made losses for the last four financial years. At the end of December 31, 2020, the company had net debt of Rs 7346 crore and a negative net worth of Rs 1,961 crore.
The company wants to use the IPO money to repay debt and replace letters of credit issued to certain aircraft lessors.
On June 21, a GoAir spokesperson said the company “has received no communication from SEBI”.
Bombay Dyeing said: “As a company policy, we do not comment on speculations.”
SEBI did not respond to requests for comment.
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